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GM reports US$5.2b loss on charge for US tax reform
[NEW YORK] A huge one-time charge for US tax reform pushed General Motors quarterly earnings into the red, but the automaker said Tuesday that earnings were better-than-expected when the tax hit is excluded.
GM reported a net loss of US$5.2 billion in the fourth quarter due to a US$7.3 billion non-cash charge due to remeasurement of deferred tax assets due to US tax reform - which other major companies also have had to contend with.
Revenues in the final quarter fell to $37.7 billion, down 5.5 per cent from the same period a year earlier.
The tax impact also led to an annual loss of US$3.9 billion, after solid profits in 2016.
But GM pointed to strong sales in the US, China and South America that helped it achieve higher operating earnings compared with the fourth quarter of the prior year.
The automaker reported a dip in North American car sales overall, where the US market in 2017 retreated from the record-setting performance of 2016 but remained at a high level.
Car sales rose significantly in China and South America, offsetting the near complete absence of sales in Europe after the company sold its the Opel/Vauxhall brands in Europe to the PSA Group.
US tax reform has led to a number of losses among large corporations such as Goldman Sachs and Caterpillar in the fourth quarter. Still, there is broad consensus among US companies, including GM, that tax cuts will benefit the economy long-term.
Excluding those items, GM's earnings translated into US$1.65 a share, better than analyst forecasts.
GM shares rose 1.3 per cent to US$40.03 after the results were announced.